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IREU Merchandising Report 2019

IREU Merchandising Report 2019

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Retail sales rose across channels in January as shoppers hit the shops for New Year sales

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Retail sales rose across channels in January as shoppers hit the shops for New Year sales

Retail sales rose in January as shoppers went on what appeared to be a short-lived quest for discounts. While sales rose across all channels between December and January, they fell by a third online, according to ONS figures. The modest growth in sales between December and January suggests shoppers were slightly more willing to buy when goods were discounted further in New Year sales. But BRC/Springboard footfall figures published earlier in the month suggested that footfall to stores was only up in the first week of January.

 

Online sales grew by almost 10% year-on-year in January – but were down by a third compared to the previous month, according to the latest Retail Sales report from the Office for National Statistics (ONS). At the same time, sales across channels grew both compared to the previous year and the previous month.

 

Some 18.8% of retail sales took place online, as ecommerce grew by 9.8% compared to last January - but fell by 33.3% compared to December.

 

The online picture comes against a wider context of rising sales. Shoppers spent 4.3% more, excluding petrol and diesel sales, in January, compared to the same time last year and bought 4.1% more goods. Compared to the previous month of December, they spent 1.3% more than the previous month, to buy 1.2% more goods than last year.

 

Looking at the longer-term picture, shoppers spent 3.9% more between the beginning of November and the end of January than they did at the same time last year, to buy 3.5% more goods. And they spent 0.5% more in those months compared to the previous three months, to buy 0.4% more goods.

 

The online story

Department stores saw 5.5% more money spent online in January, compared to the previous January, but 41.7% less than the previous month, according to the ONS figures. Almost one in five (19.1%) of retail sales in this category were online in January.

 

A fifth of sales were online in the textiles, clothing and footwear sector, where ecommerce grew by 7.5% on last year but fell by 37.1% on the previous month.

 

Household goods stores saw 14.1% of sales take place online. Ecommerce sales were up by 7.9% on last year but down by 20.9% on last month.

 

The ‘other’ stores category saw 10.2% of retail sales take place online. Sales were up by 8.6% on last year but down by 45% on last month.

 

Some 5.8% of all food retail sales took place online. Ecommerce sales in the category grew by 3.2% on last year, but fell by 19.3% on last month.

 

In the non-store retailing category, which includes pureplays alongside market stalls and auction houses, 78.7% of sales took place online. Online sales grew by 13.7% on last year but were down by 33.2% on the previous month.

 

Earlier in the month, footfall figures from the British Retail Consortium (BRC) and Springboard suggested that the number of people visiting UK shops fell for the 14th month in a row. However, the BRC-Springboard Footfall and Vacancies report found that footfall rose in the first week of January, attracted by more in-store sale events, but then fell away later in the month.

 

Commenting on today’s figures, Rachel Lund, head of insights and analytics at the BRC, said: “The new year brought a bit of cheer to retailers, after a dismal Christmas. With the school holiday extending longer into January this year and bargain hungry consumers drawn to discounts, retailers saw an uplift in spending. While this is positive news, few believe we are seeing the beginning of a turnaround in the fortunes of the industry. The discounts which drew shoppers into stores won’t last forever and with uncertainty surrounding Brexit weighing on consumer confidence, once the period of seasonal promotions is over, households are likely to remain cautious with their spending."

 

Philipp Gutzwiller, head of retail at Lloyds Bank Commercial Banking, said: “Despite all the bad news we heard about the high street in January, shoppers returned to spending after a disappointing Christmas.

 

“There’s a big difference between tempting shoppers with bargains and persuading them to keep buying once January’s discounts and new year’s resolution purchases are over though. Importantly for retailers, there’s also an enormous difference between a discounted sale and one at full margin.

 

“But whatever the margin, these figures show that shops were able to persuade their customers to spend more in January than they did in December, which is undoubtedly a positive.

 

“Without any sign that the current challenges are about to ease, they now need to continue that creativity and all-channel focus to tempt shoppers to keep spending until the current headwinds die down.”

 

Ant Payne, VP global marketing at Brightpearl, said: "High street discounts may help drive strong, temporary sales, but this strategy is a very short-term fix that’s not sustainable for long-term success. There’s also a danger that consumers will come to expect discounts anytime they consider shopping with a brand that employs this strategy.

 

"With Brexit on the way, the UK retail sector is set to change forever – and businesses are understandably worried. Research we conducted recently with over 110 retail decision-makers showed that eight-in-ten (81%) are concerned about the impact that Brexit will have on business – but investment in technology can help pave the way for forthcoming market fluctuations. The right systems can also help drive down costs, which is crucial to preserve profitability. This includes automating as many manual operational processes as possible such as orders and fulfillment which not only makes the process easier and more cost-effective for retailers but helps offer a much more seamless for shopping experience for consumers. This will ultimately help generate repeat business and result in a much more sustainable strategy for riding out Brexit-related uncertainty."

 

Image: InternetRetailing Media/Paul Skeldon

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